In a Facebook post on the second anniversary of Demonetisation, Jaitley said demonetisation compelled holders of cash to deposit in banks and that improved the lending capacity for the banks.
New Delhi, No. 8, 2018: Finance Minister Arun Jaitley Thursday said demonetisation resulted in the formalisation of the economy and increased tax base, prompting the government to earmark more resources for the poor and infrastructure development.
In a Facebook post on the second anniversary of Demonetisation, Jaitley said in first four years of the National Democratic Alliance (NDA) government, the number of income tax returns filers has gone up to 6.86 crore from 3.8 crore in May 2014.
“By the time the first five years of this government are over, we will be close to doubling the assessee base,” he said in the post titled Impact Of Demonetisation”.
The demonetisation of Rs 500 and Rs 1,000 currency notes in November 2016, the minister said, had resulted in more formalisation (of the economy), more revenue, more resources for the poor, better infrastructure, and a better quality of life for our citizens.
He further said with the implementation of the goods and services tax (GST), it is now becoming increasingly difficult to evade the tax system and the indirect tax to gross domestic product (GDP) ratio has gone up to 5.4 per cent post-GST, from 4.4 per cent in 2014-15.
Terming the criticism, that almost the entire cash got deposited in the banks post demonetisation, as ill-informed, Jaitley said confiscation of currency was not an objective of demonetisation.
“Getting it into the formal economy and making the holders pay tax was the broader objective. The system required to be shaken in order to make India move from cash to digital transactions. This would obviously have an impact on higher tax revenue and a higher tax base,” Jaitley said.
The government had on November 8, 2016, announced ban on old 500 and 1000 rupee notes, to curb black money in the system.
Of the Rs 15.41 lakh crore worth Rs 500 and Rs 1,000 notes in circulation on November 8, 2016, 99.3 per cent or notes worth Rs 15.31 lakh crore have returned to the banking system.